Pakistan prepares to open banking channel with Iran

ISLAMABAD: While Pakistan remained cautioned and reluctant to increase trade ties with Iran during the past four years because of international trade sanctions on the neighbouring country, the government, according to the ministry of commerce and industry, has finalised the modalities for opening a banking channel with Tehran.

During a meeting of the National Assembly Standing Committee on Commerce, officials of the ministry informed that during the recent meeting with a high powered delegation led by Iranian Foreign Minister Mohammad Javad Zarif, all modalities have been finalised.

According to the officials, during the meeting, both Governor and Deputy Governor State Bank of Pakistan were called to discuss the banking issues. Subsequently, the central bank has been working on the options of opening banking links with Iran. “We are analysing how other countries have established trade ties with Iran despite the trade embargo,” said the officials adding that an important meeting was held at Ministry of Foreign Affairs, where all issues related to improving bilateral trade ties were discussed.

“SBP officials may brief the committee in the next meeting regarding a development on the banking issue,” they said.

Minister of Commerce and Textile Industry, Parvez Malik said that Pakistani banks were reluctant to go for any kind of transaction due to the trade sanctions on Iran. The minister, however, admitted that India has opened its bank in Iran despite the restrictions on Iranian companies in international markets.

Chairman of the committee Siraj Muhammad Khan said Pakistan, during the past four years, kept making excuses while other countries established trade ties with Iran.

“We have lost four years by ignoring the potential of bilateral trade with our neighbouring country. While other neighbours including India not only continued its trade ties but also improved bilateral trade with Iran,” said a member of the committee and MNA of ruling party Pakistan Muslim League Nawaz (PMLN) Chaudhry Asad-ur-Rehman.

Officials from the ministry of commerce informed the committee that the main stumbling block in promoting Pak-Iran bilateral trade was the lack of banking channels. Chairman of the committee, however, suggested starting trade with Iran on a barter system as both sides had a number of sectors in which they could export and import their products.

The committee also expressed concerns over the burgeoning trade deficit in the country and directed the ministry of commerce to take special measures to boost exports and reduce imports of the country.

Minister for Commerce said the government was already taking measures to reduce the country’s trade deficit due to which exports have started increasing since the last 3 to 4 months. The committee also directed the ministry to especially focus on boosting trade with neighbouring countries, especially with Iran as there were vast opportunities for Pakistani businessmen.

The meeting was also informed that due to concerted efforts of the government, contract to export rice to Philippines and Indonesia had been finalised and under the agreement, the country would start export of rice to Indonesia by March 30.

The meeting was further informed that Pakistan was soon going to start negotiations with Chile for a Free Trade Agreement (FTA).